Analysts worry wind no longer beneath Catamaran’s wings; shares fall

By Russ Britt

Catamaran Corp. struggled and eventually gave way to a 12% drop in afternoon trading after the pharmacy benefits manager provided a 2014 forecast that was well below expectations, causing some analysts to wonder if the company is losing momentum.

Catamaran
/quotes/zigman/10864950/delayed/quotes/nls/ctrxCTRX shares were off $6.22 to $45.59 in recent action as the company said it sees full-year net income of $1.35 to $1.50 a share, and adjusted earnings of $2.04 to $2.19 a share. The outlook was Catamaran’s first for 2014.

Analysts polled by FactSet had predicted a stronger showing, with net at $1.67 and adjusted income of $2.36, which left a few analysts unsettled. But the company’s forecast of $20 billion to $21 billion in sales was in line with predictions.

“Our assessment of Q4 results and FY14 guidance suggests solid revenue trends but profitability seems to be dragged down by lower gross margins, a big increase in [general and administrative] dollars and minority interest,” Jefferies & Co. analyst Brian Tanquilut said in a note to clients.

Tanquilut warned that lower margins “will suck the wind out of [Catamaran's] sails.”

While the company’s forecast was below expectations, its actual fourth-quarter results came in ahead of predictions. Net income of $74.4 million, or 36 cents a share was ahead of last year’s $42.5 million, or 21 cents a share, for the same period a year ago. Adjusted earnings of 56 cents a share were two cents ahead of the FactSet forecast.

Sales were $4.53 billion against last year’s $3.33 billion. That also was well ahead of the FactSet view of $4.06 billion for the quarter.

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